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Considering Potential Tax Benefits

Updated on June 16, 2011

Considering how quickly tax laws may change, reviewing your qualifications every year is extremely important. Even if your 2010 tax results were not what you anticipated, you may be surprised at what you may receive under the current tax laws. Tax benefits for parents, for example, may yield numerous money-saving credits.

Tax Benefits for Parents
Tax Benefits for Parents

Tax Benefits for Parents

1. For the most part, a child may be claimed in their birth year. As there are usually exceptions to the rules, verifying this would be advised. The IRS has numerous publications if further clarification is needed. 

2. You may be entitled to tax credit for each child under the age of seventeen. Even if you are not fully eligible for this, this form of tax credit would be worth pursuing. You may find that you are eligible for a partial credit, for example.

3. In some instances, you may receive credit for various child care expenses. Dependents under thirteen years of age that need care while you are working or seeking work may qualify you for this benefit. As with other potential credits, the IRS has helpful information regarding this as well.

4. Receiving credit for earned income may also be a possibility. This tax credit may be particularly helpful if you are self-employed or earn wages from farming. The earned income credit may drastically reduce or even eliminate owed taxes.

5. Adopting a child may entitle you to tax benefits as well. Any adoption-associated expenses should be properly reviewed to determine whether they qualify or not. Including any supporting documentation regarding the adoption would also be advised.  

6. In addition to considering your own earnings, you may need to determine whether your child has any earned income. Depending upon the amount, having your child file his or her own tax return may be necessary. The IRS also offers information that specifically addresses this issue.

7. If your child has income from a designated investment, this may require your attention. Even though the income is for your child’s benefit, certain filing rules may apply. The tax rate that this sort of income falls under should be thoroughly understood.

8. As expensive as higher education can be, reducing your taxed income may be in order. This may be accomplished if you qualify for an education tax credit. This form of savings may prove to be extremely beneficial in terms of increasing your available income.

9. If you paid interest on a qualifying student loan, this may be yet another way to save. In this case, your income would simply be adjusted. Moreover, no itemization would be necessary.

10. The nature of your work and health insurance coverage may net you savings as well. Self-employed individuals who pay for their health insurance may be entitled to a deduction. Moreover, this deduction may extend to a dependent as well.

Have you learned of new child tax credit that you can claim?

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